[Warning] About the UPS Strike
- A last, best and final offer (LBFO) by Friday
- Bitcoin: Bruised not broken
- How to fight a cereal killer
- Sri Lanka’s worst holiday ever
- Buh-bye, NYC brick-oven pizza?
A Last, Best and Final Offer (LBFO)
“The largest single-employer strike in American history now appears inevitable,” says Teamsters General President Sean O’Brien, who was voted into office in 2021.
Paradigm colleague and Jim Rickards’ chief analyst Dan Amoss underscored this news item first thing this morning, cautioning: “The market is sleeping on this event.”
Namely? A probable Teamsters strike against UPS, one of the world’s biggest freight carriers.
This month, 97% of 340,000 Teamsters members nationwide “authorized a strike… should UPS fail to come to terms on a new contract,” says an article at FreightWaves.
“The current contract expires July 31, and union leaders have warned that they will strike Aug. 1 without a contract.”
A warning that’s been further galvanized this week…
“The Teamsters union said Wednesday that it has demanded that UPS Inc. present its last, best and final contractual offer no later than Friday,” FreightWaves says.
This after Teamsters and UPS reps walked away from the bargaining table late Tuesday night. Teamsters called UPS’ proposal, including slight pay increases, “appalling.”
On Wednesday, however, UPS submitted the same proposal — no new concessions.
Teamsters President Sean O’Brien responded: “Executives at UPS, some of whom get tens of millions of dollars a year, do not care about the hundreds of thousands of American workers who make this company run.
“UPS doesn’t want to pay up,” says O’Brien, himself a former UPS employee. “Their actions and insults at the bargaining table have proven they are just another corporation that wants to keep all the money at the top.”
Indeed, the company’s revenue increased to $100.3 billion in 2022 from $74.1 billion in 2019, and UPS profits more than doubled over the same period.
While full-time UPS drivers earn about $95,000 per year, on average, the starting hourly rate for part-timers is less than half that of full-time employees.
And that’s a critical piece of information since the company has long operated using part-time drivers — called “22.4 drivers” — named after the contract section they fall under.
“The most interesting aspect of the current contract negotiations may be the union’s demand to eliminate a lower, second tier of drivers who do the same work as other drivers but for lower pay,” notes business columnist Micahel Hiltzik at the Los Angeles Times.
“About half of all the Teamster members at UPS are part-timers,” he adds. “Today’s Teamster leadership, moreover, won their seats by promising specifically to take a hard line with UPS.”
So far, the union’s leadership has reached agreements with UPS on non-economic issues, including installing AC and heat shields in the company’s ubiquitous brown trucks, the interiors of which can exceed temps of 100 degrees.
Source: TwitterSome UPS trucks have translucent roofs and most have no AC… because they’re too expensive to repair?
“Good for the hardworking UPS drivers!” says Paradigm’s Dan Amoss.
“I suspect they will benefit at the expense of UPS shareholders as parcel volumes keep drifting lower and compensation rises — UPS estimates are far too high in my opinion,” he says.
And the clock is ticking on the Teamsters’ Friday deadline…
“A last, best and final offer (LBFO) is a formal offer that one side — usually the employer — submits to the other for an agreement,” says FreightWaves. The stakes couldn’t be higher either: UPS claims to handle 6% of U.S. gross domestic product daily.
But Teamsters General Secretary-Treasurer Fred Zuckerman says: “Time has run out for UPS to give workers that honorable contract.” Nevertheless, UPS CEO Carol Tome is confident her company can still broker a “win-win-win deal.”
We’ll see… Dan doesn’t share her optimism: “I still think the market is sleeping on this risk,” he concludes.
Bitcoin’s been bruised this year… but not broken.
“The formula that’s worked for buying Bitcoin so far this year is to wait for the sucker punch, then lay your money down,” says Paradigm’s charthound Greg Guenthner.
“Here’s how the two head fakes lower have played out so far this year:
“You can see how Bitcoin looked coiled and ready to break higher in February,” Greg explains. “Then, it proceeded to tumble toward $20K before sharply reversing — then breaking out in mid-March.
“Remember, Bitcoin was rallying during the beginnings of the bank turmoil back in March. Silicon Valley Bank goes down in flames and crypto catches a bid.
“You can argue that traders were viewing Bitcoin as a potential safe haven during the regional banking crisis, but I don’t believe that was the case,” he says.
“During these larger uptrends, Bitcoin demonstrates it likes to rally on bad news… which could also explain the move above $30K we’re witnessing right now.
“The Fed has been bad-mouthing crypto lately. Plus, we have the SEC suing Binance and Coinbase. All this negative press over the past few weeks — no wonder Bitcoin started to make a run.
“I don’t think this move is over either,” Greg concludes. “Assuming Bitcoin can hold the line at $30K (which is also where it failed back in April), $40K appears to be a reasonable summer target.”
Taking a look at crypto today, Bitcoin’s in the green (+1.35%), still holding the line above $30,000. And Bitcoin’s little bro, Ethereum, is similarly well-positioned — up 1% to $1,850 at the time of writing.
Per the three major U.S. stock indexes, the Dow’s faring best, up 0.55% to 34,045, and the S&P 500 is up 0.30% to 4,390. Meanwhile, the tech-heavy Nasdaq is up just 0.10% to 13,600.
As for the commodities complex, the price of oil’s static at $69.50 for a barrel of West Texas crude. And precious metals are getting whacked: Gold’s lost down 0.15% to $1,919.50 per ounce and silver is down more than 1% to $22.83.
Both of the major economic numbers of the day reinforce the Federal Reserve’s intentions to keep interest rates “higher for longer”...
First-time unemployment claims for the week gone by fell to 239,000 — far below the expectations of Wall Street economists
First-quarter GDP was revised upward by a huge margin — from an annualized 1.3% to 2.0%. The Commerce Department says consumer spending and exports are both stronger than first thought.
How to Fight a Cereal Killer
“Moving into peak summer growing season, farmers face a significant challenge: drought across the U.S. plains that threatens crops,” says our income-investing ace Zach Scheidt.
For instance, the most recent map of the continental United States from U.S. Drought Monitor…
Source: U.S. Drought Monitor
“The colors represent conditions ranging from abnormally dry (in yellow) to exceptional drought (in dark brown),” Zach notes.
As drought conditions persist, the prices for U.S. produce — including corn, soybeans and wheat — are on the rise. And “there are plenty of international food challenges to worry about as well,” he says.
“The Russian-Ukraine war rages on, entering a second summer of fighting” — making planting and harvesting in two of the world’s breadbaskets nearly impossible, notwithstanding Western sanctions on Russian grain.
“And sources in India report that harvests are running roughly 10% below official estimates, putting even more pressure on the world's food supplies.”
The upshot? “Higher food costs will hit consumers hard and cause ripple effects across our economy.
“The good news is there's a direct way to offset the higher food costs tied to grain shortages around the world,” Zach adds.
“The Invesco DB Agriculture Fund (DBA) tracks the price of a diversified index of agriculture commodities; as grain prices surge, DBA investors profit.
“Over the past month, as farmers began to sound the alarm about the health of crops, the fund broke sharply higher…
“And since we're still only midway through the growing season, there could be more room for DBA to run as drought conditions continue,” he says.
“But I must warn you, the investment opportunity is already off and running, so you'll need to put your money to work as soon as possible to capitalize on this situation.
“Any pullback for DBA looks like a great buying opportunity,” Zach says. “While no one wishes for a drought or global food shortage… protect yourself against rising food costs.”
The Worst Holiday Ever
Sri Lanka’s hard-pressed government has declared a five-day bank holiday, starting Thursday, to restructure $42 billion in domestic debt.
“The plans include a 30% ‘haircut’ — or reduction — on some government bonds held by international lenders,” BBC says, especially China and India.
Earlier this week, Sri Lanka President Ranil Wickremesinghe assured citizens that the debt restructuring would “not lead to a collapse of the banking system.”
A message which central bank governor Nandalal Weerasinghe reinforced: “Local depositors are assured of the safety of their deposits and interests will not be affected.”
They doth protest too much?
“The government's action to call an extended public holiday means it obviously saw the risk of bank runs,” scoffs Alex Holmes of Oxford Economics.
As BBC notes: “The country is facing its worst economic crisis since it won independence from the British in 1948.” The IMF and World Bank have provided “bailout” packages — with strings attached. Specifically, the “swift” restructuring of Sri Lanka’s debts.
But the verboten topic the MSM won’t tackle is how catastrophic “green” policy decisions clobbered Sri Lanka’s growing middle class and plunged the country into political chaos last summer.
Now, with inflation around 50%, the odds are clearly stacked against Sri Lankans.
Brick-Oven Pizza… Fuhgettaboutit!
More green-policy dumbassery? New York City is declaring war on coal-and wood-burning pizza ovens.
“The New York City Department of Environmental Protection has drafted new rules that would order eateries using the decades-old baking method to slice carbon emissions by up to 75%,” says the New York Post.
“The rule could require pizzerias with such ovens installed prior to May 2016 to buy pricey emission-control devices — with the owner of one Brooklyn joint saying he’s already tossed $20,000 on an air filter system in anticipation of the new mandate.”
We suspect regulating NYC pizza joints will require enlarging the goon-squad ranks…
… and, of course, a whole lotta dough.
Best regards,
Emily Clancy
Associate editor, Paradigm Pressroom's 5 Bullets
